Air Products and Chemicals, Inc.

We appreciate the opportunity to comment on the proposed rules addressing the Conditions for Use of Non-GAAP Financial Measures. Air Products is a multi-national major supplier of chemicals, industrial gases and related equipment with annual sales exceeding $5 billion.

We support the Commission's goal to improve the transparency and quality of disclosure of non-GAAP financial measures. We believe that full and effective disclosure includes: a presentation of comparable GAAP measures along with non-GAAP measures; a quantitative reconciliation between the non-GAAP and comparable GAAP measures; and statements disclosing the reasons management believes the non-GAAP measures provide useful information. Presentation of non-GAAP measures with appropriate disclosures is both within the spirit and intent of Item 303 of Regulation S-K, as it enhances a reader's understanding of the changes in the company's results of operations. Item 303 requires disclosure of material events that cause financial information to not be indicative of future operating results. The proper use of non-GAAP measures can be an effective and concise method used to achieve meaningful disclosure.

The company is concerned with certain of the proposed amendments to Item 10 of Regulation S-K. We believe it is critical to maintain the ability to adjust non-GAAP measures for large, unusual, and individually unique items, even though transactions of a similar nature (but not necessarily substance) may recur in the future. Also, we believe the continued presentation of non-GAAP per-share measures, supplemented with appropriate reconciliations, should be allowed as it is a meaningful tool in communicating with users of the financial statements. Any regulations which make it difficult to communicate ongoing or underlying results of operations will be a disservice to analysts and investors and will make it difficult to understand and compare investment choices.

The company provides non-GAAP measures of operating income, net income, and EPS and bases its MD&A discussion of the results of operations on income excluding special items. The comparable GAAP measures are provided along with a reconciliation. The exclusion of special items focuses the discussion of the results on the ongoing operations of the company and its segments. The discussion of the changes in income based on GAAP measures only would be dominated by the disclosure of a few large and unusual items. The changes in income due to operating and recurring items would be overshadowed by the disclosure of these few large and unusual items. We believe that the discussion should focus on the ongoing or underlying operations of the company and its segments. The discussion should focus on such items as sales volumes, sales prices, raw material prices, energy costs, and productivity gains. Questions from outside analysts and investors are almost always directed toward the ongoing or underlying operations, excluding special items, of the company and its segments.

We disagree with the provision in the proposal that would prohibit adjusting a non-GAAP measure to eliminate or smooth items identified as non-recurring, infrequent or unusual, when the nature of the charge or gain is reasonably likely to recur. For example, the company has periodically disposed of businesses and product lines, which resulted in material gains. While the future disposal of a business or product line is reasonably likely to recur at some point in the future, its occurrence has been very sporadic over the life of the company. Also, while a future disposal would be a transaction of a similar general nature, the specifics of the transaction would vary in terms of the size of the transaction, the interim period impacted, and segment affected. These transactions should be disclosed but the discussion of the results of operations should focus on ongoing activities, which we define as excluding such large and unique transactions. Gains from disposals of businesses and product lines are not indicative of future operating results. Another example would be restructuring charges. These charges have occurred more frequently over the past few years due to current economic conditions. However, over the life of the company their occurrence has, also, been sporadic.

We believe the company is in the best position to decide what items should be excluded from the discussion of the ongoing operations and request that regulations not limit the company's ability to exercise its judgment in this regard. The Commission has stated within the Securities Act Release No. 6349, "It is the responsibility of management to identify and address those key variables and other qualitative and quantitative factors which are peculiar to and necessary for an understanding and evaluation of the individual company." We agree with this responsibility of management and strongly urge the Commission to reinforce it in Regulation G. Statements contained within the Earnings Press Release Guidelines issued by the Financial Executives International (FEI) and the National Investor Relations Institute (NIRI) further outline management's responsibility. It is management's responsibility to discuss the company's financial position with a reasonably balanced perspective of operating performance including key financial indicators that measure the health of the enterprise. We are concerned our ability to effectively meet our disclosure responsibilities would be impacted by regulations prohibiting the ability to adjust for large and unusual transactions. The use of non-GAAP measures has been a useful tool in meeting disclosure requirements in a concise and easily understood manner.

The company, also, disagrees with the provision in the proposal that would prohibit disclosure of a non-GAAP per share measure anywhere in a filing with the Commission. If the company did not provide EPS for net income excluding special items, this amount would be calculated by shareholders and analysts. The company's concern is that some could calculate this amount incorrectly, resulting in numerous questions and confusion. It is our belief that if an error by an analyst or investor would occur then the company should correct this calculation by others, but this proposal would prohibit disclosure of per share amounts. The company is requesting guidance on what the company's obligation is in respect to Regulation FD as it relates to an investor's incorrect calculation and analysis of a non-GAAP measure impacts due to preclusion of certain information. We believe that disclosing EPS excluding special items would be in the best interest of the users of our financial statements. As previously stated, the GAAP amount along with reconciliation would also be presented. Historically, non-GAAP measures were provided to supplement the period's GAAP results as well as to clarify both the period's performance and future prospects. The company believes that it is better disclosure to all shareholders to reflect non-GAAP measures on a per share basis.

In conclusion, the company supports many of the requirements of the proposal on use of non-GAAP measures. However, we believe it is critical to allow for the adjustment to non-GAAP measures for large and unusual items. We would suggest the proposed rules be modified to allow for the adjustment of non-GAAP measures for items of a similar general nature but yet individually unique. Also, we believe the continued presentation of non-GAAP per-share measures, supplemented with appropriate reconciliations, should be allowed as it is an effective and meaningful tool in communicating with users of the financial statements. We would support regulations, which prohibit the disclosure of non-GAAP per share measures on the face of the financial statements and in the accompanying footnotes. However, we believe the use of non-GAAP disclosures when discussing the results of operations (e.g., in the MD&A) is valuable and appropriate.

We thank you for the opportunity to express our views on this reporting issue and would be available to discuss this with the staff.